History of Social Security

The Fascinating History of Social Security Surely Deserves a Read

The social security system in the US has a very interesting history. Here's a brief account of the same.
OpinionFront Staff
Last Updated: Jul 21, 2018
"The Social Security program represents our commitment as a society to the belief that workers should not live in dread that a disability, death, or old age could leave them or their families destitute."
― Jimmy E. Carter
Most of us are aware of the President Bush's proposal to the Congress in 2005 to partially privatize the concept of social security. According to this proposal, the people would get the right to invest a small portion of their payroll tax in the stocks of private firms.
Though the Congress did not act upon Bush's plan then, the concept of social security has been playing on the minds of several people, especially since the retirement of the Baby Boom generation in 2008.
The Great Depression of the 1930's brought with it a very apparently significant increase in the poverty rates in the United States, especially among the senior citizens. Not only had it destroyed the retirement plans of several Americans, but it also dramatically reduced the value of existing savings.
In such a situation, plans of some sort of 'social insurance' began to emerge, which would help salvage the deteriorating condition of the country and its people.
What Is Social Security?
▶ The Social Security Program is an official supplementary retirement system funded through payroll taxes, and consists of social welfare and social-insurance programs. Its primary objective is to make certain that every individual in the country who has paid into the program is provided with a basic standard of living that is necessary for survival.
▶ As we mentioned earlier, this system is funded through payroll taxes, which means that a portion of a worker's paycheck is deposited into a fund that provides monetary benefits to those who need them currently. This has been a topic of controversy for several reasons. The next we will look at the origin and history of social security.
History
▶ The term "social security" referred to any program that was intended to help individuals who had little or no financial resources for survival. These included the poor, elderly, physically disabled, and mentally ill. The first financial programs was undertaken by European trade guilds and later by the government, with the formation of the 'poor laws.'
▶ 'Civil War veteran pensions' were the first widespread social insurance program in the United States. In the beginning, the Union veterans who sustained injuries in battle and were disabled, or the widows of the soldiers, were the recipients of the pension amount. The veterans and families of the Confederate side were not given the payments.
▶ This pension program was later expanded in order to include all Union soldiers, regardless of any injuries, or absence of injuries. After its expansion, it became so huge that for instance, in 1894, more than one third of the money spent by the Federal government went towards military pensions.
▶ It was in the 1930's, when America reeled under the debilitating effects of the Great Depression, that the requirement for a comprehensive system of providing adequate money to the elderly and poor so that they could survive independently, was brought into sharp focus.
A huge numbers of Americans lost their jobs, and/or had no way of earning enough money to support themselves and their families.
▶ It was in 1932, right in the middle of the Depression, that Franklin Roosevelt became the President of the United States. He introduced and advocated an idea to help the people get out of this mess, which was initially referred to as social insurance. Eventually, this idea developed into the system that is in existence today.
▶ The Committee on Economic Security or the CES was formed in June 1934 at the behest of Franklin Roosevelt. The social-insurance idea of the President was already prevalent in over 30 European countries, and the committee that was based on the idea designed a plan that allowed workers to put a small percentage of their wages into an aggregate account.
After retirement, they would be able to withdraw this money from that account to take care of their monthly expenses.
▶ In 1935, the Social Security Act or the SSA became a law. Over the years, the SSA system of retirement assistance has been modified by the government according to the changes in the economic conditions of the country, and the population.
Some of the modifications include-

» The workers' families were made eligible to receive the payments.

» COLA or cost of living adjustments were included so that the benefits of security would increase according to the inflation levels without the Congress having to pass a major act.

» Disability provisions were also included in the program.
So that was all about the interesting history of a program that has embedded itself firmly into our lives. Though it has had its share of controversies and criticism, it has undoubtedly continued to provide assistance to those who need it.